Sales and Use Tax Annotations

Annotation 395.1534

(g) "SUBSTANTIALLY ALL THE PROPERTY"—TRANSFER OF

395.1534 Transfer of a Vessel. A taxpayer incorporated a wholly owned corporation in Oregon in 1977 for the purpose of a sale and transfer of title to a vessel to the corporation. On August 31, 1984, the corporation was dissolved. The representative stated that, at that time, the taxpayer retained the ship and assumed the liability on the mortgage. In December 1988, the taxpayer refinanced the original mortgage for the remaining balance due. Apparently, it was at that time the title to the vessel was officially transferred into the taxpayer's name from the corporation name.

Upon dissolution of the corporation in 1984, its sole shareholder, the taxpayer, became the owner of the vessel and assumed the liability owed with respect to the vessel. Thus, there was a transfer of title in exchange for consideration. This transfer did not qualify for the occasional sale exemption. The exemption discussed in Regulation 1595(c) applies when substantially all of the assets used by a person in a business activity is transferred. Here the taxpayer did not hold the assets in a business activity. The measure of tax is the amount owed to the mortgage on August 31, 1984. 7/7/92.